Amazon Beats Q2, Lifts 2026 Capex to $220B
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- Amazon reported Q2 2026 revenue of roughly $200.6 billion (up nearly 20% year-over-year, beating estimates by over $4 billion) and operating income that surged more than 43%, with earnings boosted by a pre-tax gain of over $53 billion largely from its stake in Anthropic.
- Amazon raised its 2026 capital expenditure guidance from $200 billion to $220 billion, driven by surging memory prices, even as free cash flow turned negative by roughly $7.6 billion in the quarter.
- AWS generated $42.2 billion in revenue (beating estimates by about $1.7 billion) and grew 37% year-over-year, marking its fastest quarter of growth in 18 quarters, per The Motley Fool.
- Andy Jassy told analysts that even at $220 billion in capex, Amazon will not have enough capacity to meet 2026 demand, adding that 2028 demand is already "striking" and enterprises remain early in using inference at scale.
- Jassy laid out a two-part investment thesis: data centers are built two years before monetization and generate revenue for over 30 years, while server and networking equipment breaks even in under three years against five-year AI capacity contracts.
- Amazon shares surged roughly 13.4% to 15.32% on the day of the report, with the stock hitting $271.58, as the market rewarded the company's willingness to take large AI bets despite near-term FCF pressure.
Why it matters: Amazon burned through $7.6 billion in negative free cash flow and lifted capex by $20 billion to $220 billion, yet the stock jumped 15% — investors are buying Jassy's argument that capacity shortages signal demand running ahead of supply, not overspend. The $53 billion Anthropic-related pre-tax gain also padded headline earnings, raising questions about how much of the beat reflects core operating momentum versus mark-to-market accounting on its AI investment portfolio.
